Shifting Geographies of Rental Affordability

Transcription

1 Tenants Union of Victoria A Tale of Two Melbournes? Shifting Geographies of Rental Affordability The TUV analysed Victorian Government data on affordable lettings from to chart the shifting geography of rental affordability in metropolitan Melbourne. This research unearthed a clear movement in rental affordability from inner and middle ring areas to the outer suburban fringe, and an observable trend from the outer south east to the outer west. As more and more people flock to inner and middle ring suburbs seeking liveability and access to jobs, services and transportation, this escalating process of gentrification is pushing rental affordability to the city s suburban frontiers. Provision of affordable rental housing in Melbourne is increasingly becoming a social policy issue because leaving it solely to market forces risks locking low- and middle-income households out of those inner and middle suburbs with greater accessibility to jobs, services and public transport options. Consequently, this transformation has potential to create two Melbournes. For the purpose of this research, metropolitan Melbourne has been broken into five regions to better understand the relative affordability of Local Government Areas (LGAs) within the inner, middle and outer rings. The middle and outer rings have been split into South & East and North & West regions in order to identify shifts in affordability both in terms from distance from the CBD and from east to west. The following map shows metropolitan Melbourne broken into the five regions and colour coded to better depict the relative affordability of Local Government Areas (LGAs) within the inner, middle and outer rings, as well as differences between east and west. Figures 1 and 2 below set out the change in affordable lettings for each of the five regions. Both graphs clearly demonstrate the significant differences in affordability for LGAs in the inner and middle rings, in comparison to the outer ring. In the inner ring, over the 15 year period, the total affordable dwellings rented in any given quarter across seven LGAs was incredibly low, typically ranging between 1-2 lettings per quarter. Melbourne s middle ring has experienced a major reduction in affordability over the last 15 years, beginning in late 25. Peaking at around 8 affordable dwellings in 21, the number of affordable lettings in the South & East LGAs of the middle ring has since dropped off considerably to levels comparable to the inner ring. Media Contact: Yaelle Caspi, Policy Officer,

2 No. of Affordable Lettings In addition, a similar trend can be seen in the middle ring North & West LGAs. During the first half of this century, this region was substantially more affordable than its middle ring sibling and topping more than 1 4 affordable dwellings rented in September 25. By 29, however, what affordability there had been in the early part of the decade had since evaporated. The total number of quarterly affordable lettings on offer across the six LGAs in the middle North West now ranges between 2 and 35. Figure 1: Total Affordable Lettings by Metro Region, Inner Ring Middle Ring (South & East) Middle Ring (North & West) Outer Ring (South & East) Outer Ring (North & West) Quarter (2-215) Figure 2: Affordability Trend by Metro Region, Quarter (2-215) Arguably the most interesting change has occurred in the city s outer ring. The graphs in Figures 1 and 2 illustrate the shift in affordability from the outer south and east to the outer north and west. Firstly, the outer ring s South & East region became significantly less affordable over the last decade. Until 25, affordability in the outer south east had been increasing, with affordable lettings across the eight LGAs reaching as high as 3 5 in a quarter. Between late 25 and the beginning of 211 affordability in the region decreased dramatically, from approximately 3 5 to 75 (roughly 76 per cent), before recovering slightly. Secondly, the number of affordable lettings in the North & West region of the outer ring has grown between 2 and 215. Starting out in 2 at a level similar to the North & West region of the middle ring, the quarterly number of affordable dwellings rented in this region steadily increased to a peak of over 2 6 in September 212. Finally, it is important to note that change that occurred in the second half of 29; there was a fundamental shift in affordability from the outer south and east to the outer north and west, particularly the outer west. In the September quarter of 29 the outer north and west accounted for more affordable lettings than that found in the outer south and east. Significantly, as the graphs above illustrate, the increase in affordability in the outer ring s North & West has not matched the decrease experienced in the South & East region. Both regions in Melbourne s outer ring continue to be considerably more affordable than areas within the inner and middle rings in June 215 the South & East and North & West regions had approximately 1 3 and 2 affordable lettings, respectively. Media Contact: Yaelle Caspi, Policy Officer,

3 In order to explore the shifting geographies of affordability identified above this paper will breakdown the five regions in greater detail, before examining the more general movement of rental affordability from inner to outer and east to west and the implications of this transformation. Rental Affordability in Metropolitan Melbourne: Regional Analysis The sections following set out the changing affordability for the five metropolitan regions in order to delve deeper into the transition of particular LGAs within them. Beginning at the inner ring, this regional analysis progressively steps out from the inner ring to the outer ring and from South &East to North & West. INNER RING: The inner ring incorporates seven LGAs: Bayside, Boroondara, Glen Eira, Melbourne, Port Phillip, Stonnington and Yarra. These seven LGAs encompass many of the more expensive and highly sought after suburbs, all of which could be typically characterised as jobs rich, high-income areas with greater access to services, public transportation and other infrastructure. Beginning with, for example, the CBD and Carlton, the inner metropolitan ring stretches through and stretching through Richmond, Hawthorn and Toorak to Balwyn and Camberwell in the inner East, as well as St Kilda, Caulfield and Sandringham in the South. As the graphs below depict, this inner ring has extremely low affordability. Figure 3: Inner Ring, Metropolitan Melbourne Figures 4 and 5 show the change in affordability for three of the seven LGAs within the inner ring from Yarra, for this exercise, can be considered largely representative of the movements experienced in Bayside, Boroondara, Port Phillip and Stonnington, all of which were very similar. The incredibly low number of affordable letting is immediately apparent. In LGAs like Yarra, the number of quarterly affordable lettings is consistently less than 3. Although the numbers are small, there has been a noticeable change in both Glen Eira and Melbourne. Media Contact: Yaelle Caspi, Policy Officer,

4 No. of Affordable Lettings Figure 4: Inner Ring, Affordable Lettings (Selected LGAs), Glen Eira Melbourne Yarra Quarter (2-215) Figure 5: Inner, Ring, Affordability Trend (Selected LGAs), Quarter (2-215) As the graphs above illustrate, Glen Eira had the highest number of quarterly affordable lettings of the inner ring LGAs; however, by 28 the City of Melbourne overtaken it. The cause of this change is not necessarily clear but there is a high likelihood that the small increase in affordability witnessed in the City of Melbourne can be attributed to higher density housing and the boom in apartment building that has taken place over the preceding decade and more. MIDDLE RING: Moving out from the inner ring to those LGAs making up the middle metropolitan ring, the middle ring has been split into two regions to identify any variances between what happened in the south and east compared to that in the north and west. Looking firstly at the Middle Ring South & East region, there are four LGAs that make it up: Kingston, Manningham, Monash and Whitehorse. As illustrated in the map below, this middle ring region includes suburbs such as Doncaster, Burwood and Box Hill in the north and Glen Waverley, Oakleigh, Clayton and Dingley Village in the South. Media Contact: Yaelle Caspi, Policy Officer,

5 Figure 6: Middle Ring (South & East), Metropolitan Melbourne From the South & East region of Melbourne s middle ring has become significantly less affordable. As discussed above (Figures 1 and 2), total quarterly affordable lettings in this region have decreased to levels comparable to the inner ring, despite being much more affordable in the first half of last decade. Figures 7 and 8 set out the movement in quarterly affordable lettings for each of the region s four LGAs. Over the period, Manningham has had relatively few affordable lettings and its experience is, in fact, similar to inner ring LGAs. Quarterly affordable lettings in Kingston and Monash have reduced from as many as 25-3 affordable lettings between 21 and 25 before falling away. While the City of Whitehorse has seen the number of affordable dwellings rented decrease from highs of 18. In June 215, quarterly affordable lettings across the four LGAs were 19 (Kingston), 8 (Manningham), and 34 (Monash, Whitehorse). Figure 7: Middle Ring (South & East), Affordable Lettings by LGA, Kingston 25 2 Manningham Monash Whitehorse Quarter (2-215) Media Contact: Yaelle Caspi, Policy Officer,

6 Figure 8: Middle Ring (South & East), Affordability Trend by LGA, Quarter (2-215) The middle ring s North & West region, situated to the immediate north and west of the inner ring, is comprised of six LGAs: Banyule, Darebin and Moreland to the north, and Hobsons Bay, Maribyrnong and Moonee Valley to the West. An increasingly popular region, the region takes highly sought after suburbs such as Thornbury, Preston, Brunswick, Coburg and Essendon in LGAs like Darebin, Moonee Valley and Moreland. In addition, the region also encompasses burgeoning suburbs to west, such as Footscray, Maribyrnong and Altona. Figure 9: Middle Ring (North & West), Metropolitan Melbourne Again, similar to what occurred in the South & East region of the middle ring, affordability went into a steep decline in the second half of 25. In the interests of clarity, Figures 1 and 11 include only three of the six LGAs; however, Darebin, Maribyrnong and Moonee Valley can be considered broadly representative of Moreland, Hobsons Bay and Banyule, respectively, which followed relatively similar paths. From the graphs below it is apparent that LGAs like Darebin and Maribyrnong (and, hence, Moreland and Hobsons Bay) began this century significantly more affordable than they are now. In Darebin, for example, quarterly affordable lettings have decreased from a fairly consistent level between 25 and 3 affordable dwellings, down to between 4 and 8 dwellings. While in Moonee Ponds, affordability has decreased to levels similar to some of the more exclusive LGAs in the inner ring, such as Yarra, Stonnington and Port Phillip. Media Contact: Yaelle Caspi, Policy Officer,

7 No. of Affordable Lettings Figure 1: Middle Ring (North & West), Affordable Lettings (Selected LGAs), Darebin 25 Maribyrnong 2 Moonee Valley Quarter (2-215) Figure 11: Middle Ring (North & West), Affordability Trend (Selected LGAs), Quarter (2-215) OUTER RING: Arguably the most significant changes can be seen in the outer metropolitan ring. As demonstrated earlier (Figures 1 and 2), each of the regions in the outer ring of Melbourne contains appreciably more affordable dwellings than the inner and middle rings put together as much as 2.5 times more, in the case of the outer South & East, and almost 4 times more, in the outer North & West. Beginning again in the South & East region of the outer metropolitan ring, as the map below depicts this region by far the biggest of the five metropolitan regions in terms of size and is made up of eight LGAs: Cardinia, Casey, Frankston, Greater Dandenong, Knox, Maroondah, Mornington Peninsula and Yarra Ranges. This large metropolitan expanse comprises a number of large, established urban centres like Frankston, Dandenong, Ringwood and Cranbourne. However, the region also includes emerging areas such as Pakenham and Lilydale. Media Contact: Yaelle Caspi, Policy Officer,

8 Figure 12: Outer Ring (South & East), Metropolitan Melbourne Interestingly, what was once considered a region with high levels of relative affordability; the region has been substantially transformed over the last decade. Figures 13 and 14 below illustrate the change in LGA affordability between 2 and 215. Again, not all LGAs have been included; however, Frankston is representative of the experience in Mornington Peninsula, while Maroondah had a similar trajectory as that found in both Knox and Yarra Ranges. On the one hand, what is indicative from the graphs is the rapid decline in traditionally affordable LGAs such as Greater Dandenong, Frankston and Casey. It seems as though urban areas such as Frankston, Dandenong and Cranbourne historically engine rooms of rental affordability have become much less affordable as people are pushed further out from the inner and middle ring metropolitan regions. On the other hand, LGAs like Maroondah, Knox and Yarra Ranges, while starting from a much lower level of affordability, have experienced decreases in the number of quarterly affordable lettings from 2 or more down to levels comparable to the inner and middle ring regions. This is particularly so for Maroondah, where suburbs like Ringwood and Croydon become increasingly sought after. The only LGA to have increased over the period is Cardinia, which includes the emerging suburb of Pakenham; an upward trend has seen quarterly affordable lettings rise from the low 1s in the early 2s to between 25 and 3 affordable lettings today Figure 13: Outer Ring (South & East), Affordable Lettings (Selected LGAs), Cardinia Casey Frankston Greater Dandenong Maroondah Quarter (2-215) Media Contact: Yaelle Caspi, Policy Officer,

9 Figure 14: Outer Ring (South & East), Affordability Trend (Selected LGAs), Quarter (2-215) Moving across to the North & West region of Melbourne s outer ring, this is the region where most of the growth in rental affordability is occurring. Consisting of six LGAs Brimbank, Hume, Melton, Nillumbik, Whittlesea and Wyndham this region covers a large area and is second only to the outer South & East region. Contained within its boundaries are suburbs like Sunshine, Broadmeadows and Epping, as well as Werribee, Melton, Sunbury and Mernda on the city s fringes. Figure 15: Outer Ring (North & West), Metropolitan Melbourne As Figures 16 and 17 illustrate, The City of Brimbank (which includes suburbs like Sunshine) had the most affordable lettings in the early 2s, between 5 and 6, before easing slightly over the last decade. Hume and Whittlesea decreased substantially in the number of affordable dwellings rented each quarter between the second half of 25 and the first half of 211, from as many as 51 and 37 affordable lettings down to 1 and 45, respectively. Both LGAs have recovered somewhat in the years since, however. Much of the increase in the number of affordable lettings for the region can be attributed to two LGAs: Melton and Wyndham. The number of quarterly affordable lettings in the City of Wyndham has increased from around 2 at the turn of the century to over 7 today. The numbers for Wyndham have eased in the last few years after reaching more than 1 1 affordable lettings in the March quarter of 212. In the City of Melton, the growth in affordable lettings has been slower than that experienced Wyndham. Nevertheless, the number of quarterly affordable lettings in this LGA has increased from around 14 in Media Contact: Yaelle Caspi, Policy Officer,

10 No. of Affordable Lettings March 2 to 47 in June 215. After reaching as high 6 in September 212, Melton has also cooled in the years since. Figure 16: Outer Ring (North & West), Affordable Lettings (Selected LGAs), ,2 1,1 1, Brimbank Hume Melton Nillumbik Whittlesea Wyndham Quarter (2-215) Figure 17: Outer Ring (North & West), Affordability Trend (Selected LGAs), , Quarter (2-215) From Middle to Outer and East to West: Shifting Geographies of Rental Affordability in Melbourne The regional analysis above demonstrates the decline in affordability across metropolitan Melbourne. With the exception of the North & West region of Melbourne s outer ring the outer western LGAs of Wyndham and Melton especially rental affordability has either continued to remain elusive, in the case of the inner ring, or has significantly declined in the Melbourne s middle ring and outer South & East region. Figures 18 and 19 below show the huge gap in quarterly affordable lettings between the inner and middle rings, on the one hand, and the outer ring, on the other. In the second half of 25, rental affordability in the middle ring LGAs rapidly decreased over a three to four year period, from around 2 affordable lettings per quarter to approximately 4, where it more or less remains today. Media Contact: Yaelle Caspi, Policy Officer,

11 No. of Affordable Lettings Figure 18: Total Affordable Lettings, Inner, Middle & Outer Rings, Inner Ring Middle Ring 5 Outer Ring Quarter (2-215) Figure 19: Affordability Trend, Inner, Middle & Outer Rings, Quarter (2-215) As the graphs above illustrate, the outer ring continues to do the heavy lifting. Although there was a large deterioration in affordability (close to two-thirds) from a peak of over 5 8 in the September quarter 25 to approximately 2 1 in March 211. Declining affordability in south eastern LGAs such as Greater Dandenong, Frankston, Casey and the Mornington Peninsula, areas traditionally considered more affordable was the cause of much of this fall. The number of affordable lettings in the outer ring has risen in the years since, driven largely by outer north western LGAs. Figures 1 and 2 highlighted this geographical shift in rental affordability in the Melbourne s outer metropolitan ring from the South & East region to the North & West region. From the September quarter 29, the North West surpassed the South East in the number of affordable dwellings being rented per quarter. This geographical shift is brought into stark relief when we juxtapose the decline in affordable lettings in places historically considered affordable, like Frankston and Greater Dandenong, with surging LGAs in the outer West, such as Wyndham and Melton, as Figures 2 and 21 below demonstrate. This transition can be found by looking closer at the shifting demographics in the City of Wyndham. With an estimated population of around 21 in 215, Wyndham s population is expected to explode over the coming two decades, expected to reach over 384 people in Between 26 and 211, there was a 76 per cent increase in the number of people living in low-income households residing in Wyndham (approximately 6 8). 2 The number of low-income renter households renting privately in Wyndham rose approximately 1 9 households to approximately 2 25 between 26 to Media Contact: Yaelle Caspi, Policy Officer,

12 No. of Affordable Lettings Figure 2: Shifting Affordability from Outer South East to Outer West, ,2 1, Frankston Greater Dandenong Melton Wyndham Quarter (2-215) Figure 21: Shifting Trend from Outer South East to Outer West, ,2 1, Quarter (2-215) A City Divided? Location is a powerful discriminator of people, the types of housing and services they can access and the jobs from which they can choose. The above research on rental affordability illuminates the increasingly precarious situation for low-income households. A lack of social housing in Melbourne means that the vast majority of low-income households must seek housing in the private rental market and yet the sector s capacity to meet this growing need looks to be significantly limited. Gentrification of suburbs in inner ring and middle ring LGAs, in combination with declining rates of home ownership, compels lower-income households, often already experiencing significant housing stress, to now compete for housing with rental households on higher incomes. This process of gentrification has arguably been underway for a number of decades now. However, its rapid intensification in middle ring LGAs, as well as the outer south eastern metropolitan region, is an escalating social policy issue. Housing (un)affordability, as a result, and the form of spatial segregation which it manifests is creating a socially polarised Melbourne. As increasing numbers of highly-skilled and highly-remunerated individuals flock to Melbourne s inner and middle ring LGAs, low-skilled workers and low-income households a forced to live further away. 4 The research above demonstrates clearly that a consequence of this process of gentrification is pushing many low-income households to the city s urban fringe; increasingly locked out of areas with greater access to jobs, services and infrastructure to areas with poorer access, potentially exacerbating economic and social disadvantage. Indeed, there is a significant accessibility deficit in outer urban areas to jobs services and public transport, particularly in Melbourne s outer north and west. Metropolitan Melbourne s greenfield communities face significant Media Contact: Yaelle Caspi, Policy Officer,

13 transportation constraints, leaving those living on the city s fringe heavily dependent on cars. 5 While individuals living in inner ring LGAs, by comparison, experience considerably more mobility as they live in areas with better public transport infrastructure. 6 A recent report by the Grattan Institute states that outer urban regions in Melbourne, with poor or no access to tram and train networks, are left with buses as the sole public transport option. 7 The infrequency of buses in these areas often makes them an inadequate and impracticable alternative transport option to the car, a situation illustrated by the substantially lower use of public transport use in outer metropolitan regions of Melbourne compared to the public transport use of Melbournians closer to the city centre. 8 The accessibility deficit extends to employment, too. The Grattan Institute has mapped relative access to jobs in Australia s four major cities, including Melbourne, for different suburbs and modes of transport. 9 The research demonstrates a clear advantage in job accessibility afforded by closer proximity to Melbourne s centre. As distance from the CBD increases, the proportion of accessible employment opportunities declines rapidly. Workers living in the city centre were found to enjoy access to 9 per cent and 46 per cent of all jobs by traveling up to 45 mins by car and one hour by public transport, respectively. When even traveling by car there are some suburbs in outer metropolitan regions, however, where as few as 1 per cent of all jobs in metropolitan Melbourne can be accessed inside a travel time of 45 minutes. The job accessibility advantage provided by proximity to the inner city is even starker when considering travel by public transport. Grattan s research finds extreme examples of suburbs where residents can access less than 1 per cent of metropolitan jobs traveling an hour each way on public transport. 1 This shifting geography of affordability to outer metropolitan regions is helping to restructure the city as suburbs and neighbourhoods become increasingly homogenised. Outer metropolitan regions, traditionally in the southeast and increasingly in the west and north, are becoming the only areas affordable to lower-skilled, lower-income households and inner regions become the exclusive domain of higher-skilled and wealthier households. A lack of adequate transport in the outer metropolitan regions can reduce access to services such as health and community facilities, whilst also presenting barriers to education and employment opportunities, exacerbating existing disadvantage in these areas. Further, a reliance on cars often more than one for each household for transportation places increasing financial pressure on low-income households living in outer metropolitan areas and can leave them vulnerable to economic forces outside their control, including increases petrol prices and interest rates. 11 Housing affordability has become a social policy issue of utmost importance. More and more lower-income or disadvantaged households are being shut out of areas of Melbourne where access to employment and services are in plentiful supply. The result is the creation of two Melbournes; a situation likely to continue as the manufacturing sector declines further and knowledge-intensive industries typically located closer to the city centre increasingly drive economic growth. 12 This spatial segregation and polarisation may have unintended consequences in terms of social cohesion. Notes on Methodology This research analyses affordable lettings data released quarterly by the Victorian Department of Human Services (DHS). 1 The number of affordable lettings is calculated by the DHS for 1BR, 2BR, #BR and 4+BR dwellings in each Victorian LGA. Dwellings are considered affordable if within 3 per cent of gross household income for four specific low-income household types: 1. 1BR dwellings Single person on Newstart 2. 2BR dwellings Single parent on Parenting Payment, with one child 3. 3BR dwellings Couple on Newstart, with two children 4. 4+BR dwellings Couple on Newstart, with four children TUV totalled the number of affordable lettings across all dwelling sizes for each metropolitan LGA. In an effort to show that areas of affordable rent are moving further away from the city, the metropolitan region was split into an 1 Affordable lettings data and rental reports can be found at Media Contact: Yaelle Caspi, Policy Officer,

14 inner, middle and outer ring. Further, for the middle and outer rings, these were further divided into South & East and North & West regions to better understand the transition in rental affordability from the outer south east to the outer north and west. The analysis includes graphs with the actual data points as well as graphs with trend line of best fit in order to smooth the curve. Notes 1 Figures sources from City of Wyndham, Population and household forecasts 211 to 236,.id The Population Experts, 2 Figures sourced from the Low Income Profile Report from.id The Population Experts, comparing changes from 26 to 211 in the City of Wyndham. 3 Ibid, p.2. 4 Kelly, J-F, Mares, P, Harrison, C, O Toole, M, Oberklaid, M & Hunter, J 213, Productive Cities, Grattan Institute, Melbourne. 5 Currie, G. 21, Quantifying spatial gaps in public transport supply based on social needs, Journal of Transport Geography, Vol. 18, No. 1, pp.31-41; and also Kelly, J-F, Breadon, P, Mares, P, Ginnivan, L, Jackson, P, Gregson J & Viney, B 212, Tomorrow s Suburbs, Grattan Institute, Melbourne. 6 SGS 212, Comparing Effective Job Density in Sydney and Melbourne, Urbecon, 212, Vol. 212, pp Kelly et al. 213, p Ibid, p.32. Referring to ABS data on household energy use in Victoria, the report states, 57 per cent of the one million adult residents in the inner zone of Melbourne s public transport system (Zone 1) use public transport compared to just 29 per cent of the 2.1 million adult residents of the outer zone (Zone 2). 9 Ibid, pp Reasonable one-way travel times were determined to be 45 minutes by car and 6 minutes by public transport. 1 Ibid, pp Dodson, J and Sipe, N. 27, Oil Vulnerability in the Australian City: Assessing Socioeconomic Risks from Higher Urban Fuel Prices, Urban Studies, Vol. 44, No. 1, pp.37-62; and Dodson, J and Sipe, N. 28, Shocking the suburbs: oil vulnerability in the Australian city, UNSW Press. 12 Media Contact: Yaelle Caspi, Policy Officer,